Mailbag, incl: The pros and cons of an interest-only mortgage? March 8, 2026

29:09It's still got to be a good investment. I am not going to diversify into what I consider to be, or what I might consider to be an objectively worse investment, but justify it because diversification. That's like, that's dumb. Diversification, as Buffett would put it. So I don't know. I'm rambling at this point. We all want the certainties, right? It's like, I want to invest in Google, but I don't want to take the currency. That's right. I hear you, man. I really do. I really do hear you. But it's sort of like, well, are you going to limit yourself to, you know, the very small handful of really, really good companies on the ASX?

29:46I wouldn't. I don't. But each to their own. If you're investing for the next six months, well, even without currency, I just would not put money in the market for six months, right? So I don't know. I'm rambling. You go. No, good, Rob. I'm going to say one thing stood out to you. You said, I hope everything will work out in the wash, but it's hard to know if I will go the distance given the strategic shifts of the market. Back to Ram's point about the medium short-term thing. If you're not going to go the distance, don't do it at all. I can't give you personal advice, Rob, so a general thought.

30:17You're either investing for the long-term or you're not, in my view. And that's not a criticism or a direction or advice. It's just, I tell you what, a long-term view and not plan to see it through. It's kind of setting yourself up for failure. You train for a marathon and sprint the first 100 metres, but you're going to struggle, right? So if you're going to train for the marathon, run the marathon. If you're going to train for the sprint, run the sprint. Don't try and train for one and run the other. If you aren't sure you'll see it through, maybe listen to yourself. I'm going to say that's not a bad thing, by the way.

30:41It's just like if you don't think you're going to, then don't set out on the journey because you end up potentially giving yourself some grief on the way through. You sell it early, sell it at the wrong price, sell it at a frustration. All the reasons, all the reasons. So just be very careful with that as a general view. I agree with Ram in terms of the currency risk. you're taking, there's also currency upside and things like if your dollar cost averaging it just matters less over time. I've said a million times before if you are going to invest in international assets as I do, your time frame needs to be longer on international assets because you don't want to be a forced seller at the wrong price and or the wrong exchange rate.

31:18So yeah, it's fine to say, well, I'm a five years to sell if Berkshire is out of the way and I want to sell them in five years time. You know, I don't want to be a forced seller at the wrong price. That's fine. If I get a price I like on Berkshire, I sell the shares, I probably won't, but if I did, then I've got to bring the money home at some point. That might be a different timeframe entirely because I might get a great share price on Berkshire, but a terrible currency. In which case, I've got those two hoops to jump through. It just makes it more complex. And that's okay. I do it. I'm happy to do it.

31:42It's not a bad thing, not a problem. Just be mindful that's what you're doing and the risk you're taking or the way you should probably play that particular game. In terms of shifts in the market, I mean, that's kind of a general, you know, talking about the impacts of AI, that's local as much as global. So kind of the same thing. and I may just have a think about how you want to do your investing in general. I don't think any of those things need to be a reason not to invest in the US or invest in the US. But if their issue is not to invest in the US, they're probably issues not to invest here and it might be worth just kind of revisiting your actual thesis and your long-term approach.

32:14And again, not as a criticism, it's not tough love, it's just, it seems to me kind of say, I'm a long-term investor, but things could change. If they change, I'm not sure if I'd stay. Now, never stick with a thesis that's broken just because you did it. I've said a lot of times, it's not buy and hold, it's buy to hold. If your thesis changes, if the price changes, yes, of course change your mind, do something different. But if you're not planning to be a long-term investor in case something like some sort of strategic shift or volatility or currency changes, probably simplify down what you're doing and keep it simpler if you can't see it through.

32:45I looked up the milkshake theory around, I think it's a very tortured metaphor, but the idea is not bad. In the sense, the US simply is the world's dominant capital market. Money's likely to flow there in times of trouble. and if it does, we saw during COVID, mate. When COVID, the trade dollar fall like 55 cents or something. And it was really quick. And it was just basically everyone went, oh my God. And every US investor went, I'm out of here. I don't care. A trade is fine, but it's not the US and I don't want to take risks. I'm bringing my money home. It's me. Right? I'm taking the money home.

33:12And so I can understand how that would play out. Over the longer term, I don't know whether that, the relative devaluation of currencies surely must be part of that story as well. I can't imagine the dollar milkshake theory standing alone in a case where, let's just be extreme for the fun of it, the US prints 10 times as much currency as it's got now. Yeah. Is capital still attracted there directionally? Yes. Are you going to do it in that situation? No. No, it's not going to be 10x. I'm just – so relatively speaking, at some point that has to break down. But maybe we print as much as the US and do it for extended periods of time, in which case maybe the dollar theory works.

33:47I don't know. um i so i sit at the top the question around i i have the same question for myself because if we were to see meaningful depreciation of the u.s dollar then me bringing my money back from the u.s is worth a heap less and if it's a structural permanent change then i'm taking meaningful risk and i have to acknowledge that for myself i don't have a i don't have a result of a solution i don't have an answer yet but i know that's what's happening now if if the uh dollar milkshake theory is right i actually end up with more money because all the capital goes there the Australian dollar falls, US dollar rises.

34:14I go, oh, thank God. I can bring home twice as much as I used to have. But that's the risk you're taking, Rob. And I can't fix it for you. Can't fix it for me. I wish I could. If I could, I would. So I don't know how you should do it. I don't know how I should do it. For now, I'm not changing anything. Most of these things do blow over. But some are structural and permanent. And that's life, right? You mentioned AI, Rob. Maybe it is structural. Maybe half the companies I own don't exist in 10 years' time or get beaten or have much lower margins. Does it mean I don't invest just in case those things happen?

34:45No. Sometimes I think we see currencies as bigger somehow than the other stuff. They're more universal, but I don't know they're bigger risks or bigger opportunities than otherwise the other issues that face our companies. So my general view has been investing in the business as you can find. Currencies will fluctuate. Just don't be a forced seller of shares or currencies at a time of their choosing rather than yours. Yeah, it's the structural part that gets me, right? And it's sort of, again, you've just, as always, you've got to stand back. Like we look at the US dollar as just like permanent, right?

35:19But it's only been the reserve currency since after the Second World War, right? Before that, for gosh, over 100 years, it was the pound sterling. Then it was the franc. Then it was the gilder. Then it was piece of eight. It was the Spanish dollar. Like, you know, 1500s, I'm back in now. I just Googled it. And it's not like this is where macro is so hard because you, and like there have been people, I mean, talk to the gold bugs, right? They've been calling for stuff for forever. And it looks like they're finally sort of having their moment in the sun, but you've had 20 years in the wilderness of really subpar returns to sort of get there.

36:03And that's, that's the part I struggle with. Cause I do look at the U S so I think everything we've said, I think it's pretty much on point. And like, you know, you would probably do well just to take the very simplistic view that, yes, it is mean reversing. Yes, it will normalize. And yes, we'll just struggle through. But at some point, it's no longer the US greenback. And if you just happen to be unlucky enough to be investing during that transition period, then a lot of those assumptions don't hold true. Now, statistically speaking, it's a pretty good bet because it's probably unlike just because the length of time that these things take, you're probably okay.

36:37but that's that's the hard part investing in not just in in terms of currencies just in terms of technologies and industries i mean technological structural change is is the best the best for big life-changing returns but also the biggest risk that you can possibly face you know the person who said the internet's not a big thing i'm going i'm going all in on this newspaper business because it stood around for a hundred years i mean again that's the same argument it's like it's it's been there forever they've always made money and he's just like it's never going to happen on my way and i oh gosh it did oh my god that was the worst investment i ever could have made like you know and it's just like i i it's it i was gonna say it keeps me up and it doesn't keep me up at night but i do i do think about that like how do you know whether this is something that may well happen at some point but it's still 50 years off or is tomorrow and i don't have a good answer for because things always go gradually then suddenly with these things they're not linear it's not like it's a slow demise like oh god it was the pound right you you speak to anyone on the planet in 1939 it's like yeah it's the pound the pound is the burn that's what we want that's the that's the real deal you know it's like five years later it's like nope everything's upside down question about notice for you i don't know if you have an interviewer you i'm sure you probably We do actually, but if you don't, that's cool.

38:00How much does it matter to the value of the US dollar that it is the reserve currency in your mind or in the minds of people who do this sort of stuff? Oh, a lot. Really? Yeah. How much does it fall? It's much stronger than it would be otherwise because it has a source of demand. I don't know. That's not true. Yeah, it's a good question. There is a demand. So normally anyone outside of a particular country, if I demand euro, well, why? Why would I want it? Or yen? I was like, well, you've got to think of international currencies as gift certificates. It's like a Westfield voucher. Is that money?

38:34In Westfield, it's money. Is it money anywhere? No, it's an absolutely useless piece of plastic. I can't do anything with it. And that's the same with the yen in the sense that it's really great in Japan and it's useless elsewhere. So the demand for yen will really be a function of what I want from that country, even if it's just debt, the debt being the product, Or if it's goods or something, that's what countries that have high exchange rates is because there's usually a pretty high demand for their currency. It's a good thing. The US dollar has demand for all the stuff that the US sells, but the US is a net importer.

39:13Most of the demand comes from it. I need US dollars because I want to buy something from Sri Lanka. I need US dollars because I want to do business with the British. What's the US got to it? Nothing. We just need a money. Money tends to one. It's a natural phenomenon. Like it's just, it's too hard to deal with too many. It's got the, it's got the acceptance. It's got the, uh, the infrastructure. It's got the social proof. It's got the depth. It's got the liquidity. If I'm an international, if I'm an economic actor on an international stage, I am just not mucking about with some also ran currency that, you know, if you're not in the top three, you're not worth dealing with at all.

39:53Right. Even in Australia and China, I was like, you think BHP, I mean, they're getting US dollars. That's how they're doing all of this kind of stuff. So the long answer is I don't know the degree of it, but it is a marginal source of demand that wouldn't otherwise be there. The interesting dynamic at the moment without going too far down this rabbit hole is the rise of stable coins, which has been a very strong pusher of or driver of pusher, driver of, yeah, push actually works. It actually works really well. I'm going to stay with that. Of demand for US dollars, not because someone in Brazil is trying to pay the FX mark.

40:34It's just like, I just want to hold, I want to hold this proxy US dollar because my own currency is rubbish. And so, and it's got, I've never, I've got no intention of going to the US. I am never going to go to a Walmart in Oklahoma and spend that, but so it will. Yes, it does impact. And if you took, actually, if someone wants to sort of look into this, there's a thing called Trippin's Dilemma, which talks exactly about this. It's like when you, there are so many great things with being the world reserve currency. One of the downside is you almost have to like definitionally run a structural trade deficit to supply the world with the dollars it demands.

41:14You know? Yeah. You could also look into the petrodollar system. And that's been an interesting source of artificially created demand. And it's basically the deal that is fascinating. It's just like, hey, Middle Eastern friends, we will protect you. But you must demand that everyone in the world, all of your customers pay for US dollars. The Saudis get a bunch of US dollars. Like, what do I do with that? I guess I'll buy some US assets. And there you go, a massive source of demand. So it just feels like logic to me. If like all else being equal, cerebus, paribus, however you say it. Yes, cerebus.

41:48you take that demand away then it feels like the dollar must fall to a degree yes I'm curious you're right because supply demand if you people want the thing it's worth less there's no less of it well there's more of it 5 % or 50 % I don't know yeah exactly yeah I don't know Motley Fool Money for more subscribe to the free newsletter at fool.com.au forward slash listener

42:12G'day Scott and Ram says Jack I hope you're both well I kissed the ring I'm sensing a bit Bitcoin question. I guess the ring I bend both of the knees, fragile as they may be, place both the palms face down on my prayer rug in front of me and worship the almighty pod machine and the modest, handsome, humble, wise and charismatic gentleman who stand responsible for its magic. That's how you do it. Also, Ram and I, which is nice. Four marks. Jack is laying on thick because he obviously wants his Bitcoin question. He said, I do not drive an hour to work each morning simply for the promise of poor wages and co-worker camaraderie.

42:45No. These are simply a few bonuses I receive In addition to the real reason for my commutes Through morning peak hour traffic An opportunity to bathe in a vehicle filled With the echoes of opportunity Wisdom and motivation To not only invest responsibly But to be a better member of the human race Your questions go to the front of the queue Every time from now on I think Jack just is an audience philosopher kings Is all I'm hearing I love it I hope my worship of the true masters of the universe I think Adam Prince of Eternia probably holds that title But we're close has been worth there's a new He-Man movie coming out just quickly is there really?

43:18yes oh I don't know sorry continue yeah is it bad? yeah I mean it's going to be terrible but I've just I'm of that genre I had a lot of He-Man I had Castle Grayskull I had Battle Cat there's a very open up Castle Grayskull hinges on one side oh yeah trap door on there that's right it was too yeah I've still got it I've still got it hey there you go yeah no it's not for sale You can't have it. There's no price high enough. Oh, yes, there is. We know you. How many big coins, Andrew? I'm telling my son about it. It's like, a lot of muscle-bound men in undies here, Dad. There's anything wrong with that, Andrew?

44:00There's anything wrong with that. What's your point, son? Is that for a time? While we're doing movies, just massive tension. Sorry, Jack, we'll get back to it. Have you seen the previews of Fackham Hall? I've seen it. Have you? Is it worth seeing? Or is it all the previews? No, it's disappointing. Yeah, okay. Massive Jimmy Carr fan. Very good short. Very, like excellent shorts. Yes. Watching the movies, everyone's laughing. I'm like, this is going to be great. It was a little, I don't know. It just, it didn't land for me. It was a bit too formulaic. I don't know. I don't know. I'm being fussed.

44:29How many stars? I've got a very high bar. How many stars? Out of five? Yeah. Two and a half. Oof. Netflix. Yeah. What do you mean? Watch it on Netflix. Did you see the cinema or is it already streaming? I watched it. Is it already streaming? no okay wait till Netflix is what I'm saying wait till down streaming oh yes yes yes yes if you want there you go not even that okay not even worth it there might be regulators listening I'm not I want the internet provided it to me I wasn't asking you where you got it from I was asking you whether I should wait till it's on Netflix before I watch it rather than go to the cinema you could yes anyway Jack says I hope my worship of the true master of the universe has been worthy of the opportunity to have my question answered As for questions, here we go.

45:16I actually have two. See how he butted us up there and threw a second one in? I've questioned before about the hypothetical transition from our current broken fiat money system to a sound money system and how that would play out in real terms. I do have another question on the same topic. I will say at the end, this is not about Bitcoin specifically. So let's try and maybe just separate the two in this question. The second one is a Bitcoin one. We'll get to it, I promise. Mortgages, says Jack. I myself am not so lucky as to owe the bank a million Australian dollars for a tiny apartment. He's been listening to you too long.

45:45However, if I did in fact have a death pledge of my own and society rolled through a monetary reset, what would be done about said mortgage? I'd slow the bank a million Australian dollars as per my long contract. However, I, along with everyone else, are now hopefully being paid in Bitcoin. This isn't a Bitcoin question really, or even a hard money one, but rather about the mechanics of a financial reset. Who decides how much of the new currency I still owe to the bank? Or do I somehow have to acquire out the old Australian dollars? I mean, I'll start off, Jack, by saying I heard this a while ago and I really love it.

46:21It's not so much that I like Bitcoin, I just hate fiat. Like, you know, it's sort of I think that's the proper way to sort of think about it. If we say you hate fiat, you hate unlimited fiat, right? You have no problem with the sound Australian dollar, it's just the fact that it gets printed is the problem. Yeah, money by degree. The ability to at a whim create money and set the price of money is just an objectively bad idea in my very, very humble opinion. I think this is a question that comes up a lot and to me it's an interesting one. I'll talk about it all day long, but I just think it's so distant.

47:00It's so distant. We were just talking before about the transition from the pound to the dollar. Yeah, yeah, yeah. Right? And it's a great example because Bitcoin is money or some other sound money is money. Yeah, yeah. So we already live in a world where something like 160 different currencies coexist. So it's not an all or nothing kind of thing. It just never is. Yeah. And even when you go, if you just focus on the top one and two, and as you go from the pound being number one to number two and the dollar from number two to number one, it's a very slow transition. There's like, there'll be plenty of people throughout that transition that were more than happy to receive pounds because pounds were still a good currency, in fact, better than 99 % of the other currencies that were out there.

47:39So we're talking about something that even if it happens and it's not even certain that it will, it's like it will happen over decades, you know, and the way it will happen will be entirely organic. So Michael Saylor talks about it a lot. He's providing digital credit at the moment. And these are, they're essentially what you, Soros is famous for. It's a speculative attack. You retain the strong currency and you sell the short one, sell the bad one, right? So I will take a bunch of debt in Aussie dollars or US dollars, because as we started the pot, like it's going to just inflate away. And they're just handing it out to anyone who can fog a mirror and I can put that elsewhere.

48:29Again, the maths is the same. As long as the currency that I'm converting that into holds its value better, it's going to make sense to do that. And more and more people are doing that. And that's what he's doing with his, what's it called, strike product at the moment. It's just like, I'll give you an 11 % yield, at call, tax deferred, absolutely backed. you know price of bitcoin could go down 70 and stay there for five years and we're still golden it's just like and and lo and behold the demand for that product is off the chart because you might not have gone into the weeds of austrian economics and and and sound money philosophy it was just like that is a really really good product with incredible uh securitization and backing behind it and it just it it's how these things play out people will just and this is the with money as well.

49:15So money serves three roles. It's like store of value, medium of exchange and unit of account. So one is the obvious, I don't, I save it and I can spend it later. That's really good. Medium of exchange is when it's sort of like I can just directly hand you that money rather than having to convert it first. So that's really handy. And then eventually you just get to the point where all the price tags are just written in that currency. But these things, this is one thing I think a lot of critics with Bitcoin fail to get their head around is that like, oh, it It doesn't instantly satisfy all of those roles right now.

49:46Therefore, it can't be money. And it's like, well, that's never been true for any kind of money, right? And not in absolute sense, yeah. And not in absolute sense. So it has to prove itself as a store of value. It's only 17 years into this experiment. It's been an incredible long-term store of value. But medium of exchange, hardly anywhere. Growing, but hardly anywhere. Unit of account? Forget about it. So these things are really interesting, Jack. I like where you're going. So I'll just preface it with that. It's just like, it's just so far away. And probably in the next decade or two, it's probably the use case is mainly a store of value asset.

50:20So I wouldn't worry too much about those things. And as it comes to like what happens to mortgage holders, well, you entered into a contract with your bank and the bank said, we will give you this much shekels and you must pay us this much back at a certain point in time with this much along the way in shekels. So that doesn't change. The contract doesn't change. So you'll still have to do that no matter what. So maybe at a point in the deep distant future, it's like, well, I just the loan is in Bitcoin or whatever sound money standard that we're using. But the existing contracts are under their existing terms.

50:55So it's a very, very slow process. I say this as much to the Bitcoin maxis as much anyone else because they just, I mean, we're an enthusiastic bunch, right? We run ahead of, you know, it's like I saw another Bill Gates video recently, too. you might have said i retweeted it it was just like he's he was being he was being asked by this journalist like like why why would i go to a website when i can read a book that was literally the question and he's explaining it and she's looking like the furrowed brown like and you can just you can just like it's laughable now but at that point in time it's like plenty of people banging the drum on terms of what this was going to be and it's like you know five years later i How's that working out for you?

51:40I'm going to stick to the books, thanks. And yet 30 years later, it's insanely laughable. So that's not to try and predict the future. It's just to say that if things are going to change, it's going to feel, in human terms, extremely slow, extremely slow. And this isn't even about Bitcoin. It's the same if you invested in Amazon or whatever. It's just like, yeah, okay, it's the online shop for the world. Is it? Well, not now it's not. and it's going to take 30 years to get there. And even now in 2026, it's like what percentage does it account for for global retail commerce? Like a big percentage but not, you know, just super slow.

52:19So I would, as I say, fascinating, fascinating questions. I just think they're more just almost philosophical at this point. and I would suspect very much that there are multiple currencies in use throughout the transition. Again, history suggests that's exactly what happens. Is it Gresham's Law? Yeah, Gresham's Law, which says whenever there are two monies, you have this phenomenon where people save in the good money and they spend the bad money. And so it's deceptive, right? So you think, well, why are you using the bad money? Because I don't want it. I want to get rid of it. because every day I hold it, it loses purchasing power.

53:03So the thing that everyone says and thinks is a good money, no one's actually quote unquote using it. And it feels like discordant with what the whole deal is about, right? It's like, oh, it's so much better. Why aren't you using it? Well, I am using it. I'm using it to save because it's vastly superior. But I am going, you know, I do not spend my Bitcoin very often. If I do, it's more just a little bit of support here and there. And then I replace it very quickly, right? Because it's just like, does that mean I'm not using it as money? I'm absolutely using it as money. I'm just using it as the store of value function of money.

53:34And there will come a point in time where I start, you know, the tradie will rock up to the house and I'll say, do you accept Bitcoin? And he goes, yep. And I'll spend it directly, right? But this is miles away. Sorry for the rambling question. That's a good one. That's a good one. Answer. I thought that's right. I would suspect in the real world, as you say, the currencies coexist for an extended period of time. At some point, if there is a change, I suspect it would happen the same way we went from imperial currency to decimal currency. Yeah, absolutely. And so it would be a case of – I don't know the answer.

54:07Depends if it's money by – if the government says you must pay your taxes in it. Correct. That's a different story. Which would be what would happen. That's the only way everything stops being done in Australian dollars. Yes. There will be an exchange rate until the currency ceases to exist. Yes. And so, Jack, to your point, you'll pay your – no one knows what will actually happen. Very, very, very, very likely. You'll pay your loan back in Australian dollars until such time as Australian dollars stop existing. And if they do stop existing, that will be our decree. And if that happens, there will be a decree in terms of the exchange rate, the same as you went from pounds, shillings and pence to dollars a cent.

54:37And they're not going to decree that because it's going so great. Right, right. In which case, it's like, oh, I will happily pay off this ridiculous loan and this funny money because the actual money that I'm using is far more valuable. So it just makes sense to do that. And frankly, at the time it gets transferred, it'll be transferred at whatever prevailing exchange rate has already been determined by the market because there is no other option. So it's kind of, pounds and dollars is essentially different because there was no parallel currency. It was just a hard switch. But at some point when you said that the Australian current, the legal standard of Australia is now Bitcoin.

55:07Australian dollars just used to exist other than as antiques. It'll be okay. Well, every Australian dollar is now worth this many Bitcoin. Prices, mortgages, whatever, just get repriced in that exclusively only. And that'll be how it's now. So I'm reasonably sure, but anything could happen between now and then. You know the dominant currency in use in El Salvador is the US dollar? Is that right? I'm not surprised. And El Salvador, for those that don't know, they adopted a Bitcoin standard. Yeah, yeah. So they got the full enthusiastic support of Bicali there, right? And the US dollar is more dominant.

55:41So it takes time to change. These things are just very, very, very slow. Again, the internet is a great example. It was very, very slow to get off the ground. I mean, some of these protocols we're using were actually developed in the 70s. Do you know what I mean? Like, it goes back a long way, a long way. After the fact, these things always feel obvious and inevitable, but they never are. They never are. Exactly, exactly. And, yeah, and the path is obviously, yeah, the path is clear in advance. Same thing you're saying, but the way we get there also clearer than it seems in advance. Last question for Jack, and speaking of some theoretical questions, My second question is absolutely about Bitcoin, specifically and wholeheartedly.

56:24It's a simple one, but also very complicated in my mind. I'm going to time you on a three-minute answer to this one, right? Oh, gosh. If the entire world was to transition using Bitcoin entirely, how much money do I actually have? Let's say I have one Bitcoin, for argument's sake. By definition, I have a claim to one 21 millionth of the wealth of the entire world. But how much actually is that in Aussie dollar terms today? hey, how many yo-yos can I buy? If only one Bitcoin today is eventually going to make me rich enough to buy New Zealand and scrap it for parts, then that's enough for me to sit on.

56:57Hope you've made a great 2026 full-on jack. Ram, I will only just for fun tell you, I've done a little bit of research while you were talking. The answer is$21 ,619 ,047.62. For what, sorry? That's what Bitcoin's worth if we only use Bitcoin. I'm not making up. There's a mob called Force for Good. They reckon global wealth is$454.4 trillion. And so if you divide$454 trillion by 21 million Bitcoin, you get, whatever I said it was,$21 ,619 ,000. Yeah. Is that right? Well, for starters, again, sounds about right. I mean, it's a lot. The number is a big number. We can argue the toss, but it's just like it's orders of magnitude higher than what it is, which is why I just bang the table and say it's the most asymmetric bet of your lifetime.

57:49So if you're not holding 1%, I don't know what to tell you. But anyway, for starters, just quickly, Jake, it's never going to happen. No one's going to click their finger and every government in sync is going to just do it. It is not going to happen. And it almost mechanically couldn't happen because, like, let's say that they did. Let's say the press announcement came. You woke up tomorrow and it turns out all world leaders got together and said that, it's like, well, how do you get it? Now, do you think anyone who's holding the Bitcoin is just going to go and sell it to you at the price it was yesterday?

58:20No. My bags have been massively pumped by every government around the world. I am not selling it. The only other way to get it is to mine it. But you only get like, what, three or so per block at this point in time. And that's incredibly hard to be successful at winning a block. So, you know, it's almost impossible to go that way. So I'll just go back to my earlier point of it being a very slow transition. But let's imagine that it did. Your mental model is exactly right. This is why it's – I was thinking this the other day. I think why it's so hard to get your head around is because when we speak value as Australians, we speak English as the predominant language in Australia.

59:07AUD is the predominant economic language we speak. So when I say to you, this is worth$20, you just get what that means. You can instantly contextualize how much work do I have to do for that? What else can I get with that? And it just, it makes sense. Someone arrives tomorrow from Sudan and you give them a$20 note, right? They don't know anything about it. Just boom, just cold landed here in Australia. And they will go, is this a lot? I mean, you could have given them You could have given the equivalent of a dollar or you could have given a hundred dollars. I don't know. What is it? It's completely, I don't speak the language, right?

59:42So now all of a sudden Bitcoin comes along and we all go, what's it worth? And the only way that we can express that is by talking about dollars because dollars is the language that we use to communicate value. Yeah, that's right. You know, and it's weird, right? And it's like, well, they're really just the way I like to think of it. Any money is just a different ruler on which to measure stuff. Again, step outside of our little human constructs here. There is just monkeys and there is stuff. Nothing else exists, right? It's just all made up in our heads, right? From human rights to PTYLTD, you know, company structures.

1:00:19They're entirely fiction, as is money itself. So what really matters is how much do other people think this is worth, not in some other currency, but in terms of stuff. And so when you think about it through that framework, it's always, I mean, the meme in Bitcoin is everything divided by 21 million. Which is true. Ask yourself this. Ask yourself, forget Bitcoin, right? What's one US dollar worth? Yeah. Now, let's pretend that you live in the US and because you live in the US, you're not aware of other countries existing. Hello, American friends. I'm sorry. You're a little bit insular. So you live in America and only the US dollar exists, right?

1:01:05So there's no other frame of reference. When you say to someone, what's a dollar worth? It's kind of like, well, the only way I can answer that is by converting it to bananas or houses or cars or coffee. Or labor. So labor or the 4.8 billion units in the economy. I mean, money is often described as the most saleable good. It is the good that every... We actually do have a barter system, right? It is effectively just that we're bartering using that one half of every trade just happens to be this token that we call money. But in and of itself, it's absolutely nothing. It's just it's a instantiated ledger, either in paper currency form or in database form, that we have all just used to determine what that thing is worth relative to that thing.

1:01:56I tie myself up in knots whenever I try explaining this kind of stuff. The wrinkle is that the current oil currencies exist at the same time, even though in theory they can't all be worth. You could use Australian dollars tomorrow to buy everything in the world. So what's the Australian dollar worth in that case? well worth as much as Bitcoin relative to the proportion of whatever. Sure, sure, sure. Or yen. Or you could have – if all of a sudden New Zealand decided to adopt the Australian dollar but there were no more dollars printed, let's assume that's true, right? Yep. Then the dollar would be worth more.

1:02:26Why? Because more people would need it and they would pay more for it to have it so they could buy the things. If tomorrow everything in New Zealand was priced in Australian dollars and the New Zealand dollar was done away with, and again, Rams assaulted our American friends, so let me insult our Kiwi friends, they would have to use Australian dollars to do it. How would they do it? Well, they'd go and sell something to get Australian dollars. Or they'd go and work to earn Australian dollars. Sell their labor. Sell their asset or sell that, exactly. And they would generate Australian dollars. Now, those Australian dollars have to go somewhere.

1:02:50So that would actually create meaningful demand for the Australian dollar. Because all of a sudden, there were more people who wanted it. And assuming no more was printed, then that's how it would end. So the price would go up. Equally, if WA seceded tomorrow and said, actually, we're going to have the West Australian dollars rather than Australian dollars. Okay, our Western Australian friends, where our friendship group is getting smaller. that would have the same issue. You would have less demand for Australian dollars if the same number were in existence and the dollar would fall relative to all those other things.

1:03:17But again, to Ram's point, if within a society you say$1 is one-tenth of my hourly labor and half a can of Coke, then that's what it is. And so we're really just finding ways to compare my labor and my can of Coke. I've got one in front of me as I normally do. That's what we're comparing. And so it's a really good question, Jack. There is a much bigger wrinkle, mate. I don't want to go into it a lot of time because I did deliver you to three minutes around. I think we're probably 10 in. which is gross wealth. You have to rely off for debt and how you deal with debt in the Bitcoin world is a whole different thing and fractional reserve bank, I mean, the whole thing.

1:03:49Ram's point is, I don't think the world economic system would survive if we transferred everything to Bitcoin tomorrow. Oh, it would be messy. Oh my gosh. It would be miserably, it would be miserable. That's the right word. Why? Because once you turn off fractional reserve banking, then the whole thing got, Like, honestly, the whole thing, it blows up. It mathematically can't sustain itself. There is more debt than there is money. That's all you have to say to a 12-year-old. It's like, I don't know. It's like, this is how much debt there is in the world. This is how much money in the world. It is physically impossible to pay that back without printing new money.

1:04:22That's just how it works. And so you play that forward for any length of time. Either it's a slow transition or it never replaces it for those very reasons that there's just too much in the fiat world to not want to. Even if fiat – we've probably seen this in the Sound Money episode, I think, or subsequently. There are ways you could make a transition to a better money without causing stupid amounts of pain. It would still not be particularly – but you would have to – I mean, ironically, Bitcoin's a trustless system, which doesn't require anyone's involvement. But if you were a fiat currency issuer and you wanted to transition the world to a sound money standard of whatever sort, including your own dollars, by the way, If the RBA said, and the government said, we've decided we're going to print more Australian dollars, period, you go, okay, that sounds bad.

1:05:06And they say, yeah, we're going to take 30 years to do it. And we'll just slowly reduce it down to zero and the world will have time to adjust over that period. It's not long enough that people are going to make stupid overnight, sell everything, disastrous things. So, Jack, probably go back to your first question of what happens. It would take a very, very long term if governments are able to choose. Now, maybe they're not, but in that case... No one who has a money printer voluntarily gives that up. Right. But even the non-voluntary notion of giving it up probably only happens as a result of an extreme, extreme, extreme devaluation and probably a very long period of time because the rest of the, I'll say west of the world, inverted commas, is not running on Bitcoin, still needs that stuff to make it work.

1:05:47And so it's kind of, it goes from being, I'm not going to give it up because I like being able to do it, to I'm not going to give it up because I know what disaster will happen if I do it. the smart ones then say we need to wean ourselves off this over time so that we don't have that cataclysmic you know gradually the suddenly event um so yeah but so the reason to say jack is because the wealth is half the conversation the debt is the other half the conversation how much would you have um i don't and by the way the the wealth is probably measured in debt inflated dollars by which i just mean is it really worth that if there's not enough debt to buy those things off you no okay so what's it really worth um and then the whole question just devolves really really fast from there.

1:06:23So Jack, I don't know the answer. Randall doesn't know the answer. Very, very, very stupidly complex. In theory, you can't just stay in the current economic system and just replace with Bitcoin without the debt issues. The answer is what I said,$21 million per Bitcoin, or 21 millionth is worth$21 million. That's just what it is now. The chance that it's worth anything like that in the fullness of time is probably hard to support given what's likely to happen in terms of the reversing of all that sort of debt-fueled growth. And that's got to happen if sound money becomes a thing. At least you can still have debt, but you can't have inflationary, fractional reserve-issued debt.

1:07:02And that becomes a deal. Oh, it's such a – I mean, I won't get back to the sound money episode, but it just really makes the debt be far more judicious and prudent and fair. I was saying to one of my lefty mates the other day, It's like if you are in support of fairness and an equal, you know, fair go, then you really should be on board with this kind of stuff. Because everything that you're angry about is misdirected at this like weird notion you have of capitalism, not recognizing it's sort of like the socialist tendency of money management that causes so much of our problems. I'll just make a very quick point on what you were saying there.

1:07:44The biggest bear case for Bitcoin is prudent financial management and monetary management. Why would you use Bitcoin? We don't need to. Everything's great. It's only got a chance because it solves a problem. If there wasn't a problem, it's like, well, there may be some technical things that are better off, but it's just not going to happen. And just the other point that I want to make there as well is just that this is, it's the network effects of the thing that give it the value. You know, it doesn't matter what people get so hung on glass beads, shells, yen, I don't even know. It's the size of the network that matters.

1:08:19Do you want to join this network? We've got on one network called the Australian Docks. That was really good network for Australians because everyone in Australia will accept it and it's really great. And Bitcoin, as long as I can throw a rock into a crowded stadium and be lucky to hit a Bitcoin or someone will happily accept it. So it's sort of like, you know, the value is going to be derived really. Whatever that number is, it's going to be a function of the adoption. And as long as more people like come on, we've said it a million times. It's just like that's the thesis, right? And it will be a gradual process.

1:08:50And it just reaches a point where it's kind of like people will just, you won't need a government decree because it will be, it will just be, I just want it because it's better. The question is when and to what a great crowds out the fiat at the same time and how that system continues to operate. I mean, the irony is that the more Bitcoin is taken up, the more the non-Bitcoiners have to lose. Oh, yes. If you're going to play the game, play it early is the lesson. Yes, absolutely. But also on the flip side, it makes the final eventual adoption harder because you're going to have more and more aggressive vested interests who want to try and stop it happening.

1:09:29But the more they have to lose, the more they perceive they have to lose. You know, it's kind of - Well, it's interesting, isn't it? It's true. The wrinkle on this - Three minutes was such a pipe dream. The thing on this is that you can - The people who will fight it will be, frankly, bankers, politicians, and people who benefit from the Cancelon effect. You know, the fiat system is incredibly wonderful if you're in the right position. And so, yes, vested interests will absolutely fight it and will be very difficult. But it kind of, it has to reach a point where it's sort of like, what do you, you can't, no one had to advocate or put government decrees in to get people to adopt the internet or radio or electricity.

1:10:21In fact, what happened with all of those technologies? They were invented. They were laughed at. People started using it. They tried to regulate around it. Government tried to step in. It's like, no, no, no, it's bad. It's going to create. It fought every tooth and nail for it. And then it comes this non-controversial thing. This is why, because we just all want it. The electorate wants it. The people who vote us in want it because they're using it. And I don't need to convince anyone anymore that, can you imagine going to a, could you imagine going to an internet conference this year? It's like, oh, they're holding an internet conference in Sydney.

1:10:54Oh, we should go. there's gonna be all these interesting speakers and they're gonna talk about the wonderful future of the internet and how it's gonna change like no it's boring it's uninteresting it's just is i don't need to explain it and and i mentioned sailor before a recent pot he was talking about that in fact in 30s time it's not going to be interesting there's not going to be anyone talking about it's just going to be no one's no one's going just you know when you when you're fitting out your corporate headquarters go are you putting running water in it yeah why wouldn't why wouldn't i why are we even talking about that it's a given that i'm going to be able to do that Yeah, exactly.

1:11:25So anyway, it's just like the – I'm speaking as if these things are inevitable and I really need to walk that back. But that's how you've got to think about this stuff. You've got to think about Eurozacro. That's the key. That's absolutely the key. I'm as bullish as any person on this planet, but I'm also a realist, right? It's just like very – it's going to be very slow in our terms and it's going to be very scary. And that is the story of every structural change ever. And you can't have the upside without that. You can't have your cake and eat it too. I want multi-bagger returns and I want it tomorrow and I want no volatility.

1:12:00It's like, well, don't we all? Yeah, yeah. The other thing to what Jack, just a really quick thought, way to think about it, is not so much how much... So the thesis for, and I own a very small number of Bitcoiners, we all know, what's the number of Bitcoiners, the number of sats, because the cookies know that Bitcoiners are divided into sats. How many sats in a Bitcoin, mate? I should know, so I don't know. A hundred million. A hundred million, thank you. It's all arbitrary, it doesn't matter. The whole world could run on one Bitcoin if it had to. Anyway, so I have a very small number of stats.

1:12:31The case for a higher price, higher dollar value of Bitcoin, or more purchasing power of Bitcoin, if you want to avoid the fiat reference, which is Ram's kind of point earlier, is simply that the similar limited number of them, and the more people who have them, the more people who want them, the higher the value in general terms. And somewhere between now and 100 % Bitcoin-only financial world, it's simply worth more if there are more assets that people want to transact for them using them. Which is exactly the same example like if Australia or New Zealand. If New Zealand became part of the Australian currency and it would be an issue anymore, the value would go up.

1:13:08What does it go up to? It doesn't matter if you have a target you want to go and hit. The question really is… Actually, it doesn't actually matter. When you get to that point, at that last breath, it's irrelevant. No one says how many gold doubloons do I get for an Australian dollar. It's like I actually don't even think there's a functional exchange rate. Actually, the question is like asking what is the smell of the color yellow? Or it's like it's a category error. A yellow is really pronounced. No, you're right. I was big. It's like it doesn't make any sense. How much is it? It's not worth anything because it's not worth anything because there is no amount of, you know, gold is a bad example, of shells that you can give me for my dollars.

1:13:55I don't want them. So what's the exchange rate? Infinite is the exchange rate. My point was going to be that if you have less than 1 21 millionth of the wealth of the world already, then more than you have now is the answer. Yeah. That's why if you're particularly, ironically, the richer you are, the more Bitcoin you should have, not for any other reason other than you have more to lose in proportional terms in that circumstance. If we change tomorrow and said, right, from now, how many Bitcoins you've got as a portion of$21 million, that's what you could afford to – that's what you own as a portion of the world's output.

1:14:25And then, Jack, do you want to buy New Zealand, right? So, if you've got – if you're – I'll say Warren Buffett for fun. I'm not saying Tom Buffett what he should do, but he's got more to lose than someone with nothing already because no dollars and no Bitcoin is the same thing. $100 billion and no Bitcoin It's fine Until unless You know Jack you've got You end up with I'll make fun A million Bitcoins So you've got 1 21th of the world's value Buffett is way less than that And so there is The future value of that This is exactly the thesis For those who are Super bullish I'm modestly bullish Given I earn some It's just that It's just It will Yeah When If To the Sorry again To the extent to which the world is valued in Bitcoin if I have a greater share of the world's Bitcoin than the share of the world's currency, I get richer.

1:15:13Mathematics, how does that make sense? It's just that simple. Look, there's one quantity that they're not changing and there's another quantity that is changing. And so everything in economics is relative, right? Here's how much stuff we have and here's the stuff that we measure that in, whether it's fiat or Bitcoin or gold or whatever. And if one is going up at a faster rate, so if you think that human civilization will continue in advance and we will have more material wealth, And if you think they're not making any more Bitcoin, well, it's not even a matter of opinion. It's just facts. It's just how it works.

1:15:44You know, it's just like, well, one's getting more. So therefore one has to buy more, right? Like that's just how it is. And that's what's so interesting about it because it's like there is nothing new under the sun except every now and again there is. And we've never had something that is perfectly scarce. We've had scarcity. We've never had perfect scarcity. and we've never had a degree of scarcity which can be manipulated. We talked about oil before, right, in Friday's pod. You know, it's like when we said, well, what happens when the price of oil goes up? People start drilling for it and they rat around different trade lines.

1:16:18We'll figure out a way. You can't do it with this, right? And in a world of AI-generated abundance, you know, this is probably going to have more and more of a use case. It's in the same way as just like, if you think it's dumb that every quarter the Reserve Builders Association of Australia gets together and decide how long a ruler is, then you're a sound money advocate, right? If you think that's a ridiculous proposition, you're a sound money advocate. There you go. Should we leave it with that? Yeah, that was never going to be three minutes. Good question, Jack. Love that, mate. And really, I mean, what I like about it is it's the kind of the sound money flow on rather than just Bitcoin specifically.

1:17:00Not that Bitcoin's bad, but it's a nice way to talk about it. As I say, not that I like Bitcoin, I just hate Fiat, right? It's just the only real shot we've got. Except you don't have I'm anti-Fiat tattoo on your backside. You have a Bitcoin logo, which is weird. Yeah, it's a cleaner message. You're welcome, Fools. If you're hanging around this long, congratulations. You get the Andrew Page Bitcoin tattoo image stuck in your head for the rest of the day. You're welcome. Until then, until next week, keep that thought in mind and fool on. Cheers. The Motley Fool and people appearing in this program may have positions in the companies mentioned.

1:17:35General advice only. Please speak to your financial professional to understand how it may pertain to your situation. Subscribe to the free newsletter at fool.com.au forward slash listener. The Motley Fool operates under Financial Services Licence 400691.